It is human nature to prefer brand new items over used or old ones. Whether you are talking about cars, shoes, mobile phones, computers or appliances, you are almost always advised to go with brand new. But cars, shoes and the rest depreciate over time. Property on the other hand, will appreciate.
If you buy an old home, it will cost you less and proper renovation will enable you to enjoy a hefty profit. But what about buying new property?
According to a survey by Trulia, the ratio of people who prefer to buy new property to old property is better than 2 to 1. By definition, a “new home” is brand new or never been lived in. It can also be a home that is purchased during its pre-construction stage.
So is it really better to buy a new home? Logic and a sense of pragmatism say, “Yes”. But before you decide, here are the pros and cons of buying a new property:
1. Customized Design
One of the fun things about buying a new property is having your say in the design process. The architect or developer will surely welcome your inputs so the house can have elements that best represent your personality. It’s literally having the dream house you’ve thought about your entire life built before your eyes.
2. Ready For Move In
If you’re not the type who wants to wait one and a half to two years having your home built, you always have the option to buy newly constructed houses. There is no need to review design drawings, color palettes or debate whether the stairwell should feature stainless or wooden railings. Everything has been done by the contractor. All you need to do is move in once you’ve made the required payment.
3. Modern Design
Newly built homes utilize principles of modern design which focus on efficiency and convenience. Bedrooms have their own toilet and bath which are designed to maximize space. In older houses, with the exception of the Master Bedroom, all other bedrooms share one toilet and bath which is located down the hallway. New homes also feature plenty of storage and shelving spaces.
4. Lower Maintenance Costs
When you buy new property you can be assured its construction passed the standards of the city government. This includes piping, water system, electrical wiring, sewage system and drainage. There will be less repairs or improvements to be made. By comparison, the built- in systems of old houses may be outdated or may not even pass city government standards. You may have to spend more to have your home safe and livable.
5. More Energy Efficient
Newly built homes make use of the latest construction materials which are more energy efficient. You can have better insulation in newer homes compared to older homes. This will result in having lower utility bills and consequently, lower monthly expenses.
6. Built- In Technology
Many developers incorporate the needs, wants and demand preferences of the current market of buyers. Since today’s generation of consumers is tech- savvy, modern designed homes are usually fitted with the latest devices. These include Closed Circuit TV, alarm and security systems, fire prevention devices and most, if not all, have been wired for Internet connectivity.
5. “New Owner” Feel
There is also the special benefit of being the first or new owner of the home. It can be comforting knowing you’re residing in a home that has never been lived before. Your memories and experiences shall be the only ones that echo and resonate throughout the hallways and walkways of the new house.
1. More Expensive
It is estimated that new property is 20% more expensive than old property. Materials are more expensive and so are the cost of labor and production. If you are buying directly from a developer, the question you have to ask yourself is “Will it be worth the expense?” Remember developers need to make a profit and profit can be attained by streamlining costs or padding the selling price. Unless you inspect the house with a trusted realtor or architect, you may not be able to justify the premium price of new property.
2. What You See May Not Always Be What You’ll Get
Be wary of flyers that come your way or of the images you see on an online listing site. What you see may not always be what you’ll get. Excitement can turn quickly into disappointment when you find out the house doesn’t look anything like the image on the flyer. This is because you have to pay for the extra amenities or features. The unit on the collateral could be one with all the bells, whistles and trimmings. But the basic unit may leave much to be desired.
3. Logistical Issues
Because there are fewer areas available for development, many of the newer houses are located away from the commercial and business districts. Not only will this become an inconvenience, but it could have an effect on the future value of your property.
4. Smaller Lot Area
Lack of available areas for development also means most new properties are built on a smaller lot compared to older homes. This will have an impact on the overall net gain on your property should you decide to sell it on the future.
5. Risk of Non- Completion
If you’re buying a new construction, you face the risk of non-completion. This is a very real situation in the real estate market especially if you are dealing with developer that is not well known. The developer could run into financial trouble, lose or run down their available financing or gets into a major disagreement with the general contractor. These incidents can severely impact the capability of the developer to finish the property.
6. Risk of Delays
If you’re putting up a new house from the ground up, you can run the risk of having delays. Contributing factors could be delayed delivery of materials, changes in plans, high rate of absenteeism, inclement weather and disagreements on budget revisions. Your new home could fall behind schedule by 3 months or more. Meanwhile, if you’re on loan, you keep paying interest and you are exposed to market forces.
7. Substandard Build
It is also possible that continued delays could lead to a new house of substandard build. It may not be according to what you had in mind. The developer could resort to short cuts in order to meet your time- table and budget. You may end up living in a home that does not live up to expectations. Your dream home may end up becoming a nightmare.
Your decision to buy a new home will be influenced by a number of factors. These factors include your budget, future plans, present needs and wants and overall assessment of the neighborhood. It may seem like an easy decision but it is not. Take into account your current situation and consider if all the advantages validate the higher cost of buying new property.
- John Manciameli talks to Sally Prowse, CEO of Sandcastle Finance October 2, 2017
- John Manciamali on The Adviser – Elite Brokers September 28, 2017
- Published September 1, 2017
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